TAIPEI OFFICE SEPTEMBER 2018 MARKETBEATS 2,510 0.4% 9.3% AVERAGE RENT RENT GROWTH RATE VACANCY RATE (NTD/PING/MO) (QOQ) Economic Indicators 2018-2019 2018 Q1 2018 Q2 Forecast HIGHLIGHTS GDP Growth 3.0% 3.3% Service Sector Leasing Activities in Xinyi District Flourish GDP Growth 3.1% 2.9% N/A In Q3, the vacancy rate in Taipei’s Grade A office market declined 1.2 percentage points from the CPI Growth 1.6% 1.7% previous quarter to 9.3%. Although completion of Nanshan Plaza pushed up the vacancy rate in Unemployment Rate (Jan to July) 3.7% 3.7% N/A Xinyi District, notable leasing activity offset the rise to some extent. For example, in Q3 Dentsu Source: Ministry of the Interior, Oxford Economics Taiwan and its subsidiary took out a 5,000-ping space in Nanshan Plaza in order to relocate from Note: Growth figure is y-o-y growth Rent & Vacancy Rate their offices in Nanjing/Songjiang, Xinyi and Dunbei/Minsheng. Nanshan Plaza also welcomed new 2,600 15 ) tenants TSAR & TSAI Law firm, Reuters and Blackrock. Elsewhere, Farglory Xinyi Financial Building mo 2,500 added a number of new tenants, which leased office spaces ranging from 100 to 300 pings. 10 2,400 Overall Rent Edges up 5 2,300 In Taipei City, Grade A office rent in the overall market increased to NT$2,510 per ping per month Vacancy Rate (%) Rate Vacancy 2,200 0 on average in Q3, up approximately 0.4% q-o-q, driven by the growth in Xinyi from NT$3,030 to (NTD/ping/ Rent NT$3,050. Leasing activity and rental growth remained stable in other regions. Rent Vacancy Rate Green Becomes Standard in New Office Buildings Source: Cushman & Wakefield Research Supply Pipeline Green buildings have caught on in Taiwan as occupiers increasingly place an importance on 80,000 environmental awareness, energy savings and their carbon footprint. Reflecting this trend, the A Cushman & Wakefield 70,000 Research Publication market has welcomed such green Grade A office projects in recent years as Nanshan Plaza, 60,000 10-year Average = 20,000 ping 50,000 Taiwan Cooperative Financial Holding’s headquarter building, Cathay Landmark, Huanan Bank’s 40,000 30,000 DATA headquarter building, Hongsheng International Financial Center and the upcoming Cathy Minsheng Area (Ping) Area 20,000 INTO Jianguo Building. Buildings that achieve reputable green certification tend to attract MNCs and 10,000 ACTION command higher rent. 0 2013 2014 2015 2016 2017 2018F 2019F 2020F www.cushmanwakefield.com Source: Cushman & Wakefield Research TAIPEI OFFICE MARKETBEATS SEPTEMBER 2018 PLANNED & UNDER GRADE A RENT Wendy Hsueh INVENTORY VACANCY SUBMARKET CONSTRUCTION (Ping) RATE NTD/Ping/MO USD/SF/MO EUR/SF/MO Director, Valuation & Advisory (Ping) Services | Research, Taiwan Western 40,200 2.7% 0 2,100 US$1.93 € 1.66 Tel: +886 2 8788 3288 Nanjing/Songjiang 36,600 14.9% 8,000 2,030 US$1.87 € 1.61 [email protected] 9/F, Capital Square, Dunbei/Minsheng 195,600 12.2% 28,500 2,280 US$2.10 € 1.81 97 Song Ren Road, Xin Yi District, Dunnan 103,700 7.4% 0 2,350 US$2.16 € 1.86 Taipei 110, Taiwan Xinyi 333,400 8.4% 11,000 3,050 US$2.81 € 2.42 Taipei City 709,500 9.3% 47,500 2,510 US$2.31 € 1.99 1USD= 30.5256TWD, 1EUR= 35.4725TWD as of 28th September 2018. Key Leasing Transactions Q3 2018 PROPERTY SUBMARKET TENANT PING LEASE TYPE Nan Shan Plaza Xinyi Dentsu Taiwan 5,000 Relocation Nan Shan Plaza Xinyi TSAR & TSAI Law firm 1,100 Relocation Nan Shan Plaza Xinyi E-Sun Bank 840 Expansion Nan Shan Plaza Xinyi Reuters 450 Relocation Nan Shan Plaza Xinyi Blackrock 450 Relocation Farglory Financial Center Xinyi Worldquant 310 Expansion Farglory Financial Center Xinyi Gucci 290 Relocation DATA Cathay Landmark Xinyi Vena Energy 260 New Lease INTO ACTION Significant Projects Under Construction PROPERTY SUBMARKET MAJOR TENANT PING COMPLETION DATE A Cushman & Wakefield Cathy Minsheng Jianguo Building Dunbei/Minsheng - 11,900 2018 Research Publication Cushman & Wakefield is a leading global real estate services firm that UDN Zhongxiao Building Xinyi - 11,000 2018 delivers exceptional value by putting ideas into action for real estate occupiers and owners. Cushman & Wakefield is among the largest real Taipei Dome Xinyi - 11,400 2020 estate services firms with 48,000 employees in approximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core Yuanta Life New Headquarters Nanjing/Songjiang Yuanta Group 8,000 2020 services of property, facilities and project management, leasing, capital China Life, China Development markets, advisory and other services. To learn more, visit China Life Headquarters Dunbei/Minsheng 16,600 2020 www.cushmanwakefield.com or follow @CushWake on Twitter. Financial Copyright © 2018 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy. www.cushmanwakefield.com Copyright © 2018 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy. TAIPEI INDUSTRIAL-OFFICE SEPTEMBER 2018 MARKETBEATS XIHU SECTION 1,280 0.1% 1.7% AVERAGE RENT RENT GROWTH RATE VACANCY RATE (NTD/PING/MO) (QOQ) Economic Indicators 2018-2019 2018 Q1 2018Q2 HIGHLIGHTS Forecast GDP Growth 3.1% 3.3% Strong Take-up in Wende Secondary Sector Growth 3.0% 4.9% N/A In Q3, Jiuzong Section’s Voltronic Power Technology Building was added in Neihu Technology CPI Growth 1.6% 1.7% Park (NHTP), which includes nearly 2,000 pings of space for Voltronic Power’s headquarters. In Source: Directorate-General of Budget, Accounting and Statistics, Oxford Economics Wende Section, Building A of Boss The World D.C. recorded full occupancy at quarter’s end after Note: Growth figure is y-o-y growth a combined 2,000-ping lease by TMT companies and a gymnasium, equaling the full occupancy Rent & Vacancy Rate ( X i h u S e c t i o n ) levels in the property’s Building B and C achieved since Q2 2016. The section’s vacancy rate 1,300 16 tightened 2 percentage points q-o-q to 6.2% in Q3, marking a historical low. 1,250 12 Xihu Section recorded steady take-up on the quarter, with move-ins and move-outs offsetting. 1,200 The section’s vacancy rate edged up 0.1 percentage points q-o-q to 1.7%, remaining the lowest 8 1,150 among all three I/O sections. Elsewhere, Jiuzong Section saw relatively less take-up and the 4 release of large areas of space, contributing to a vacancy rate increase of 1.9 percentage points 1,100 Rent (NTD/ping/mo) Rent q-o-q to 23.0% in Q3. 1,050 0 (%) VacancyRate 2008 2009 2010 2011 2012 2013 2014 2015 2016 20172018Q3 Market Holds Stable Rent Vacancy Rate (%) Rent held firm on the whole in Xihu, Wende and Jiuzong Sections in Q3, finishing the quarter at Source: Cushman & Wakefield Research an average of NT$1,280, NT$970 and NT$920 per ping per month, respectively. There were no major investments in NHTP in Q3. Capital values in each section also were steady: Xihu at Future Supply NT$520,000–620,000, Wende at NT$380,000–450,000 and Jiuzong at NT$350,000–430,000 per A Cushman & Wakefield ping. 50,000 Research Publication 40,000 Supply Wave to Hit in 2020; Solid Demand Remains (ping) With the market not scheduled to receive a significant volume of new supply until completion of 30,000 DATA the large-scale NHTP 2.0 BOT in 2020, strong demand in Xihu is expected to drive rental growth 20,000 INTO ahead. Rental levels in Wende should keep steady on demand from domestic firms in NHTP. ACTION SupplyFuture 10,000 Jiuzong could see rent fall on a slowdown in take-up. - 2018 2019 2020 2021 www.cushmanwakefield.com Source: Cushman & Wakefield Research TAIPEI INDUSTRIAL-OFFICE MARKETBEATS SEPTEMBER 2018 PLANNED & UNDER GRADE A EFFECTIVE RENT Wendy Hsueh VACANCY CONSTRUCTION Director, Valuation & Advisory SECTION RATE (PING) NTD/PING/MO USD/SF/MO EUR/SF/MO Services | Research, Taiwan Xihu 1.7% 31,400 1,280 US$1.18 €1.01 Tel: +886 2 8788 3288 [email protected] Wende 6.2% - 970 US$0.89 €0.77 9/F, Capital Square, Jiuzong 23.0% 33,600 920 US$0.85 €0.73 97 Song Ren Road, Xin Yi District, Taipei 110, Taiwan 1USD= 30.5256TWD, 1EUR= 35.4725TWD as of 28th September 2018. Key Leasing Transactions Q3 2018 TENANT INDUSTRIAL PROPERTY SECTION PING LEASE TYPE CLASSIFICATION Metropolitan Era Headquarters Xihu TMT Industry 210 New Lease Lyon Technology Center Xihu TMT Industry 120 New Lease Building B of Tokoyo Enterprise Headquarters Xihu Trade industry 220 New Lease Building B of Tokoyo Enterprise Headquarters Xihu TMT Industry 210 New Lease Building A of Boss The World D.C. Wende TMT Industry 660 Relocation Building A of Boss The World D.C. Wende TMT Industry 660 New Lease Building A of Boss The World D.C. Wende Sports Activities 660 Expanded Lease Significant Projects Under Construction PROPERTY SECTION MAJOR TENANT PING COMPLETION DATE DATA Ln. 48, Xingshan Rd Jiuzong - 5,200 2019 INTO ACTION NHTP 2.0 BOT Project Xihu - 29,500 2020 Xinhu 3rd Rd.